Making Tax Digital: Closer than you think
The mandate for HMRC’s digital revolution comes into force in April 2018…
This may seem like a long way away, but is in fact just 13 short months from now, and HMRC’s major public beta will actually be going live this April. You may be wondering how we got here so quickly? Well, it’s been a long time coming.
Cast your mind back to 1997. ‘Cool Britannia’ had just become a thing, unknown author J.K. Rowling released the first in a mildly successful series of books about a young wizard, and HMRC introduced the Electronic Lodgement Service (ELS), enabling the paperless filing of tax returns. Within 5 years, this was replaced with File By Internet (FBI) to enable additional returns types and simpler filing.
Fast forward to 2006. Lord Carter’s Review of HMRC Online Services outlined a number of digital reforms that would be required, paving the way for HMRC to introduce iXBRL for Tax Computations and Accounts filed with HMRC in 2010, the publishing of HMRC’s digital strategy in 2012 and Real Time Information (RTI) for PAYE in 2013.
All of these have been stepping-stones on the journey to digital reform in the UK, climaxing with Making Tax Digital.
Preparing for change
With reform comes changes and uncertainty. HMRC published its consultation documents in August 2016, outlining its intentions for MTD and asking for feedback on specific areas. Based on these consultations, we carried out a survey of UK accountants to gather the reaction and responses to the consultations. Over 930 accountants passionately responded, which you can find here: see the results.
HMRC provided responses to its consultations on the 31st January 2017 (because this is always a quiet day for accountants?!), which answered a number of outstanding questions, but not all. What we do know is the various MTD staging dates for UK businesses, the information that they will have to submit and the frequency of those submissions, representing a huge change for up to 2.4m SMEs in a very short period.
The trick with any major change is to be prepared. Digitising the UK isn’t going to be as easy as flicking a switch in April 2018; businesses will need time to understand how this affects them, implement digital methods and adjust their business routines to ensure compliance. How do they do this? Usually by turning to one of three trusted advisors:
- Their accountant – you are their number one source of advice
- Their bank – if they trust them with their money they should trust their advice
- Their mate ‘Dave’ down the pub – whose extensive knowledge comes courtesy of Wikipedia and Aunty Google
Accountants need to be ready to advise their clients and the prospects that are coming their way. They need to have an ‘MTD-ready’ digital practice, and that starts with an online digital presence. The days of a website being your online business card are over, it now needs to be a portal that provides digital record-keeping services, a secure area to exchange important documents and allows people to pay for the services provided.
This digital shopfront provides prospects and customers with their first impressions of you and your practice, and we all know that first impressions count. Your brand is at stake.
Making an impression
Whilst ensuring people’s first impressions of your practice are great, you also need to consider what their pain points and problem areas are so that you can provide a solution. By providing them with digital record-keeping, you will assist them with the running and managing of their business, whilst allowing for real-time collaboration and access to their data for advisory and compliance purposes.
All of this is only going to be as good as the processes and productivity of your own workforce. Ahead of the MTD mandate, you also need to make sure that your practice is as productive as it can be with the existing software it uses and embrace new solutions that could further drive increased effectiveness and streamline processes.
You also need to ensure that your existing software is going to be MTD-compliant ahead of the mandate to ensure your practice and clients have time to understand the changes.
Building upon a history of early compliance, IRIS will be enhancing KashFlow to enable SMEs to join HMRC’s public beta in April 2017. We will also deliver MTD-compliant releases of IRIS Accountancy Suite and PTP Platform Suite in October 2017, empowering accountants to manage their HMRC public beta clients ahead of the April 2018 mandate.
To register your interest in HMRC’s public beta, or any of our MTD product releases, email us via email@example.com.
Riding the digital wave
If compliance history has taught us anything (iXBRL, RTI, AE, FRS), right now is the window of opportunity where you can not just ride the MTD wave, but get ahead of it and have a prime spot on the crest.
Ensure your practice is digitally ready by equipping your compliance kitbag with all the digital tools you need to support and lead your clients’ digitisation plans before it’s too late.
IRIS’s proven track record of compliance and digitisation in the UK market space is unrivalled, so if you want some help or have any questions, speak to us today to find out how we can assist you.
For more online information about MTD, check out our Making Tax Digital Hub, a teeming hive of MTD news, insight, events (including our latest MTD roadshows, held throughout the UK this spring) and resources exclusive to accountants.